Is the effectiveness of the Collateral Assignment of Lease for an Azal Coffee franchise dependent on any other agreement?

[Item 22: CONTRACTS]

• 1. Introduction. Franchisee has entered into a Franchise Agreement with Durar Investment, LLC ("Franchisor"). The Franchise Agreement requires Franchisee's lease for the Premises to contain certain provisions. In consideration of the agreement of Franchisor to enter into a Franchise Agreement with Franchisee for an Azal Coffee franchise to be located at the Premises, Landlord and Franchisee agree that the provisions contained in this Addendum will be applicable to the Lease notwithstanding anything to the contrary contained in the Lease.
• 2. Use. The Premises must not be used for any purpose other than the operation of an Azal Coffee during the term of the Lease, including renewals.
• 3. Franchisor's Options. Landlord and Franchisee grant to Franchisor the exclusive right, exercisable at the option of Franchisor, to be assigned all right, title and interest of Franchisee in and to the Lease and the Premises:
  • a. on the expiration or termination of the Franchise Agreement. Franchisor must give written notice of its intent to exercise this option within thirty (30) days of the event triggering the option;
  • b. on the expiration or termination of the Lease or on Franchisee's loss of its rights of possession to the Premises, whether by Franchisee's default under the Lease or otherwise. Landlord shall provide Franchisor notice of default as provided under Section 9 and Section 10. Franchisor shall exercise its right to accept assignment of the Lease within such periods; and
  • c. on Franchisees abandonment of the Premises. For this purpose, abandonment will be conclusively presumed if Franchisee fails to have the business open and fully operational for two (2) consecutive days.

On the giving of notice of exercise by Franchisor under this Section, the Lease, and all right, title and interest of Franchisee under the lease and to the Premises will be automatically, and without need of further instrument, assigned to Franchisor. If Franchisor does not give notice of exercise within the applicable time period, Franchisor will be deemed to have forfeited all its rights under this Section. Landlord and Franchisee agree to execute documents confirming this assignment in the form presented by Franchisor, including a short form of Lease suitable for recording.

[Item 22: CONTRACTS]

NOW THEREFORE, it is hereby agreed as follows:

• 1. Collateral Assignment. Franchisee hereby assigns to Franchisor all of Franchisee's right, title, and interest in and to the Lease, including any and all rights or options of Franchisee to extend, renew, or purchase the leased property through a right of first refusal or otherwise upon the occurrence of any of the following:
• A. Termination of Franchise Agreement. Upon termination or expiration without renewal of the Franchise Agreement, Franchisor shall have the option to accept the assignment of the Lease pursuant to this Collateral Assignment of Lease by giving the notice prescribed by this Collateral Assignment of Lease, in which case it is agreed the Lease shall remain in effect as to Franchisor.
• B. Termination of Real Estate Lease. Upon termination of the Lease as to Franchisee or termination of Franchisee's possession rights under the Lease, whether by Franchisee's default under Lease or otherwise, Franchisor shall have the option to accept the assignment of the Lease pursuant to this Collateral Assignment of Lease by giving the notice prescribed by this Collateral Assignment of Lease, in which case it is agreed the Lease shall remain in effect as to Franchisor.
• C. Franchisee's Right to Assign. At Franchisee's discretion, Franchisee may assign Lease to Franchisor, and Franchisor may accept such assignment, at any time.
• 1. Effect of Assignment. Upon Franchisor's exercise of its option to take assignment of the Lease:
• A. Franchisee shall remain liable under the provisions of the Lease, including without limitation, that Franchisee shall remain liable for any amounts owing, or any other default occurring, prior to the effective date of assignment. Franchisor shall not be responsible or liable for any liability of Franchisee under the Lease, nor shall the exercise of any of Franchisor's options to take assignment of the Lease be contingent or conditioned upon Franchisor curing any default or breach of the Lease by Franchisee.
• B. Franchisor shall succeed to all of Franchisee's rights, options, and obligations under the Lease commencing with the effective date of the assignment and shall have

[Item 22: CONTRACTS]

• D.

New Real Estate Lease.

It is hereby agreed that if the Lease is terminated or expires without renewal, and the Franchisee and Landlord enter into a new lease arrangement, any such new real estate lease shall be deemed to be the Lease for purposes of this Collateral Assignment of Lease thereby making it fully applicable to the new lease.

[Item 22: CONTRACTS]

8. Miscellaneous.

• A. Use of Real Estate. Landlord hereby agrees to and acknowledges Franchisee's right to use and display Franchisor's Marks as that term is used in the Franchise Agreement, subject only to any limitations imposed by Franchisor and any local, state or federal law. Landlord agrees that it will not limit Franchisee's right to use Franchisor Trademarks. Landlord further agrees to and acknowledges that the real estate subject to the Real Estate Lease shall be used solely for the operation of an Azal Coffee. Landlord agrees to notify Franchisor in the event that Franchisee begins to use real estate in any other manner and Landlord shall consider such use as an event of default.

Source: Item 22 — CONTRACTS (FDD page 51)